Tag: Homeland Security

Ten-Year TRIA Reauthorization Bill Scheduled for Late-October Markup in House

Posted on by Trey Jackson

TRIA Reauthorization Bill News Conference - Oct. 19, 2019

House Financial Services Committee Chairwoman Maxine Waters (D-CA) formally introduced H.R. 4634 – the Terrorism Risk Insurance Program Reauthorization Act of 2019 – on October 16 and stated it will be part of an October 29-30 full committee markup.  (Chairwoman Waters at podium, above).  The announcement came before a joint House subcommittee hearing, which focused on the program and a possible fourth reauthorization of the Terrorism Risk Insurance Act (TRIA).  

  • “We want to reauthorize [the Terrorism Risk Insurance Act] just as it is,” Waters told CQ Roll Call.  “We’ve got support from the Senate, that’s what the Senate wants to do. And you know it’s not easy for both sides to come together.”  (CQ, Oct. 16)
  • During the Wednesday news conference, Waters stated, “Nearly two decades after TRIA was enacted, TRIA has thankfully never been triggered, and the program is working as intended, effectively protecting our economy from the costs of a terrorist attack and providing security for many of our nation’s hospitals, stadiums, schools and small businesses.”
  • She added, “Without a reauthorization, the program would expire at the end of 2020, but we could experience the harmful effects of a failure to reauthorize as soon as January of 2020. And so, I am pleased to put forth … a bill that provides a ten-year clean reauthorization of TRIA.”  (Committee news release, Oct. 16)

  • TRIA has been extended in 2005, 2007 and again in 2015 – following a 12-day lapse when Congress failed to complete their work on reauthorization at the end of 2014.
  • A long-term, clean TRIA reauthorization is a top priority for The Real Estate Roundtable.  Before the House hearing, the Coalition to Insure Against Terrorism, which includes The Roundtable, wrote to the subcommittees’ leadership in support of H.R. 4634.  (CIAT letter, Oct. 16)
  • The Roundtable and nearly 350 companies and organizations also urged Congress on September 17 to swiftly pass a long-term TRIA reauthorization. (Roundtable Weekly, Sept. 20)
  • House Financial Services Committee Ranking Member Patrick McHenry (R-NC) stated during the Wednesday hearing that Congress should first update TRIA to address cyberterrorism risks. “We’ve had substantial changes internationally since the last reauthorization.  I want to make sure we do the right thing when it comes to cyber threats, and I don’t believe what we have currently in law is sufficient for that,” said McHenry.  (CQ, Oct. 16)
  • In the Senate, TRIA reauthorization was a focus of a June Banking Committee hearing chaired by Sen. Mike Crapo (R-ID). (Roundtable Weekly, June 21)
  • Roundtable President and CEO Jeffrey DeBoer noted during an October 1 podcast episode of “Through The Noise,”, “Businesses and facilities of all types need to see the terrorism risk insurance program extended. This need applies to hospitals, all commercial real estate buildings, educational facilities, sports facilities, NASCAR and theme parks, and really any place where commercial facilities host large numbers of people.”
  • TRIA will be the focus of an October 30 discussion during The Roundtable’s Fall Meeting with American Property and Casualty Insurance Association President and CEO David Sampson.

Chairwoman Waters stated during the news conference that after the late October committee markup of H.R. 4634, “I am committed to bringing the bill to the floor soon afterward, and I will be exploring vehicles for the bill to be attached to.”

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Treasury Releases Regulations Addressing National Security Concerns and Foreign Investment in Real Estate

Posted on by Trey Jackson

The Treasury Department yesterday issued proposed regulations to comprehensively implement the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), which seeks to more closely scrutinize certain investments and real estate transactions potentially affecting national security. (New York Times, Sept. 17) 

  • The proposed regulations include reforms to the Committee on Foreign Investment in the United States (CFIUS) – an interagency committee authorized to review certain transactions involving foreign investment in the United States for national security concerns.  The CFIUS reforms in FIRRMA received broad support in Congress and were signed by President Trump on August 13 as part of a defense funding bill. (Wall Street Journal, Aug. 15 and Roundtable Weekly, August 17) 
  • The Treasury released the rules, which affect real estate and private equity transactions, in two parts:

Provisions Pertaining to Certain Investments in the United States by Foreign Persons (31 C.F.R. part 800)

Provisions Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States (31 C.F.R. part 802)

  • The second part of the regulations clearly demonstrate that the federal government is intent on reviewing more real estate transactions for security concerns, while considering country-specific exemptions for the first time. 
  • The text affecting real estate includes, “FIRRMA expands CFIUS’s jurisdiction to include certain types of real estate transactions involving the purchase or lease by, or a concession to, a foreign person of certain private or public real estate located in the United States.”
  • The rule continues, “FIRRMA focuses on two general categories of real estate and provides certain exceptions. The first category of real estate is described by its relation to airports and maritime ports. The second category of real estate is described by its relation to U.S. military installations and other facilities or properties of the U.S. Government that are sensitive for national security reasons.”
  • An analysis of the proposed CFIUS reform regulations is available via Bloomberg Law.
  • The full text of the proposed regulations and frequently asked questions can be found on the Department of the Treasury’s website. 

The Roundtable plans to prepare comments, which are due by October 17, 2019 before the law is scheduled to go into effect in February, 2020. 

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Senate Banking Committee Holds TRIA Hearing; Coalition to Insure Against Terrorism Urges Long-Term Reauthorization

Posted on by Trey Jackson

A hearing on The Reauthorization of the Terrorism Risk Insurance Program  before the Senate Banking Committee was held on June 18 as the Coalition to Insure Against Terrorism  (CIAT) – including The Real Estate Roundtable – submitted  comments  urging Congress to pass a long-term reauthorization of the Terrorism Risk Insurance Act (TRIA). 

CIAT’s comment letter  to Chairman Mike Crapo (R-ID), above, and Ranking Member Sherrod Brown (D-OH) urges prompt congressional action for a long-term reauthorization of this critical program.
  • CIAT’s comment letter to Chairman Mike Crapo (R-ID) and Ranking Member Sherrod Brown (D-OH) urges prompt congressional action for a long-term reauthorization of this critical program.  The letter states, “At almost no cost to the taxpayer, the Program has been the key factor in ensuring that the private insurance market has remained intact and continues to meet the needs of commercial policyholders during the on-going threat of a future terrorist attack – all while minimizing federal taxpayer exposure.”   
  • Senate Banking Committee Chairman Michael Crapo (R-ID) discussed reauthorization of the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) at The Roundtable’s Spring Meeting in April.  (Roundtable Weekly, April 12).  The Committee’s Ranking Member, Sen. Sherrod Brown (D-MA), acknowledged the need to extend TRIA before its expiration at The Roundtable’s Annual Meeting on June 11 in Washington.  (Roundtable Weekly, June 14) 
  • Testifying before the committee, Marsh’s property terrorism placement and advisory leader Tarique Nageer noted that the expiration of TRIPRA without a replacement could create capacity shortfalls, especially for firms with “significant workers’ compensation accumulations. 
  • Nageer stated, “We are already seeing an impact on policies that extend beyond 2020, with some insurers either seemingly unwilling to offer terrorism coverage beyond the expiration of TRIPRA or seeking to increase prices to cover the additional risk to their portfolios. Without a decision to reauthorize or extend TRIPRA, we expect to see more sunset provisions in policies and higher costs as we get closer to December 31, 2020.” (Nageer’s testimony, June 18)

    Marsh’s 2019 Terrorism Risk Insurance Report 

  • Chairman Crapo stated that he anticipates additional “balanced reforms” to TRIA that “reduce taxpayer exposure” without substantially increasing costs or decreasing take-up rates.  His focus was on what changes are necessary based on data, not whether the program is needed.  Only two Republicans attended the hearing, whereas the Democrats in attendance voiced unified support of TRIA. (Senate Banking Committee hearing video, statements and testimony)
  • Chairman Crapo and Sen. Brown agreed that it was important that reauthorization take place sooner rather than later to ensure a lapse in coverage does not happen again.   Sen. Menendez (D-NJ) noted during the hearing that a lapse in 2014 created uncertainty, resulted in sunset clauses on policies, and increased costs on long-term construction deals.  A similar situation could begin as early as January 1, 2020.  
  • Additional hearings on TRIA are expected that would include policyholder and insurer witnesses and could address issues such as the length of another reauthorization and the scope of TRIA regarding cyber, nuclear, biological, chemical, and radiological risks. 

A long-term authorization of TRIA continues to be a top policy priority of The Real Estate Roundtable.  (Capital and Credit sections of The Roundtable’s 2019 Policy Agenda and  FY2019 Annual Report) 

Other Resources:

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Pipe-Bomb Mailings Draw Attention to Building Security, Terrorism Risk Insurance Program

Posted on by Trey Jackson

In the wake of this this week’s national pipe-bomb mail campaign, the implications for building security and terrorism risk insurance are profiled in today’s The Real Deal.  (Real Deal NY, Oct. 26)

In the wake of this this week’s national pipe-bomb mail campaign, the implications for building security and terrorism risk insurance are profiled in today’s The Real Deal.  (Real Deal NY, Oct. 26)

  • Real Estate Roundtable Senior Vice President Chip Rodgers is quoted in the article, which reports how numerous building managers are ramping up security after multiple suspicious packages containing potential explosive devices were found mailed to high-profile Democrats throughout the country. 
  • The Real Deal also reports that the Terrorism Risk Insurance Act (TRIA) helps building owners manage the risks associated with large-scale acts of terrorism.
  • Rodgers comments that although the small size of the devices discovered this week are not likely to trigger TRIA, the attempted attacks show how “terrorism continues to pose a clear and present danger to our nation, to American businesses and to real estate.” 
  • With the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) scheduled expiration date at the end of 2020, The Roundtable is advocating for the long-term reauthorization of the program.Rodgers also notes that “TRIA does not stop terrorist attacks, but it does undermine the goals of terrorists who seek to weaken or destroy our economy.”  He adds other nations have permanent terrorism insurance programs because they “recognize that markets cannot underwrite this risk.”
  • “There is no homeland security without economic security,” Rodgers told The Real Deal.

The Roundtable’s Homeland Security Task Force (HSTF) and Risk Management Working Group (RMWG) met on Oct. 18 at the Federal Bureau of Investigation’s New York City office to discuss the threat landscape and real estate industry concerns.  HSTF and RMWG will meet next on Nov. 13 at the FBI’s Washington, DC headquarters.

Coalition To Insure Against Terrorism (CIAT) Submits Comments to Treasury on Effectiveness of Terrorism Risk Insurance Act(TRIP)

Posted on by Trey Jackson

The Roundtable and its partners in the Coalition to Insure Against Terrorism (CIAT), submitted  detailed comments Monday on the overall effectiveness of the Terrorism Risk Insurance Program (TRIP) to the U.S. Department of Treasury’s Federal Insurance Office (FIO).

This week’s   comments   support TRIP as a “tremendous success” yet provide recommendations on three primary aspects of the program: Standalone terrorism insurance; Nuclear, Biological, Chemical or Radiological (NBCR) availability; and Cyber terrorism.

The Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) requires  Treasury to issue proposed rules to implement changes to TRIP, which is set to expire on Dec. 31, 2020 (Roundtable Weekly – Jan. 16, 2015) 

As FIO works on preparing its 2018 report on TRIP’s effectiveness, the coalition’s comment letter presents views from policyholders and risk managers – and supplement earlier remarks submitted by CIAT in 2016 (Roundtable Weekly, June 3, 2016). 

This week’s comments support TRIP as a “tremendous success” yet provide recommendations on three primary aspects of the program: Standalone terrorism insurance; Nuclear, Biological, Chemical or Radiological (NBCR) availability; and Cyber terrorism. 

The CIAT comments note there has been no evidence that private markets can develop adequate terrorism risk capacity without some type of federal participation.  The letter also notes that “in the wake of a major terrorist attack, (the program) ensures that a significant portion of the costs of recovery would be borne by the private sector.”  

The comments also include a suggestion that FIO should consider making the program permanent, stating that most other countries insurance programs are “of continuous duration, and it would benefit market stability to make TRIP permanent as well.” 

How other nation’s implement terrorism risk insurance programs was the focus of a discussion with Julian Enoizi, chief executive of Pool-Re during last week’s Spring Roundtable Meeting in Washington, DC. 

Additionally, Marsh  recently released its 2018 Terrorism Risk Insurance Report, which presents data on purchasing and pricing trends in the terrorism insurance marketplace. The report finds that the highest terrorism insurance take-up rates by industry in 2017 were real estate companies, education entities, health care organizations and financial institutions.  It also explores how the terrorism insurance market continues to innovate and respond to the needs of global organizations in light of an evolving risk landscape.  (BusinessInsurance, April 20, 2018) 

With TRIP set to sunset at the end of 2020, The Roundtable has formed a Terrorism Risk Insurance Working Group to explore potential options in advance of the reauthorization debate that is expected to begin in earnest next year.  The Working Group’s goal is to develop a strategy for a permanent, or long-term, national terrorism insurance program that would enable policyholders to secure the terrorism risk coverage they need without facing periodic renewals by the government.